During the early stages of the Covid-19 pandemic, ecommerce was one of the biggest stories in retail. Lockdowns and public-health concerns for retail workers and consumers resulted in a mass migration to online sales. The pandemic essentially squeezed 10 years of digital sales penetration into three months. In response, retailers scrambled, innovated and adapted their distribution and brick-and-mortar operations to keep pace.
Eighteen months later, online sales show few signs of reverting to pre-pandemic levels…. Fulfilment costs, for example, can account for 12-20% of ecommerce revenues, squeezing margins and making profitability a mirage.
Retailers must now recognise a few truths: unprofitable growth destroys value; and healthy, sustainable growth should be the goal. Success will require a concerted, organisation-wide effort. The good news: our analysis identified some common trends among leading retailers and highlighted four imperatives that can point organisations down the path to profitability….
More than 50% of consumers expect to continue their online shopping habits after the pandemic abates. This pattern will fuel the growth of online sales, which are expected to contribute to 100% of the increase in sales of soft goods over the next three years. Forecasts suggest online sales could account for nearly half of all retail revenues by 2024.
(From ‘Solving the Paradox of Growth and Profitability in eCommerce’, McKinsey & Co)